This rally isn’t going down without a fight. The better than expected jobs report is this morning’s catalyst, sending S&P futures 13 points higher to break out of the little channel from which they broke down yesterday.
Yes, it’s all very confusing – especially since the Fed just cut rates based on what is ostensibly pretty decent data. And, with a little more of a push from algos, SPX could make new highs this morning.
What isn’t confusing, however, is that VIX has held important support and our 2s10s model is still signalling a downturn — meaning this pop should be faded.
continued for members…
As long as VIX holds the red TL, bears are in business.
A close-up:
The latest breakdown for the 2s10s could be the biggest and steepest in quite a while.
Though USDJPY bounced off the channel bottom yesterday, I think it breaks down today. 
Note that CL’s bounce this morning will very quickly run into TL and MA resistance. 
RB is backtesting its SMA10 and white channel midline again.
The 60-min chart for ES.
And, SPX’s daily chart. More stop running today?
UPDATE: 10:10 AM
Manufacturing ISM came in at 48.3, still contraction territory. USDJPY initially plunged, then reverted back to flat. 
VIX also plunged, and is menacingly sitting at the day’s lows. 
It’s an important make or break time for the bears. My gut tells me 3063.96 was the high.
I have to run out for some meetings, should be back by 2pm.
GLTA.
UPDATE: 3:00 PM
The ramp job is on. CL has spiked nearly 5% from this morning’s lows.
On the other hand, USDJPY hasn’t bounced much at all.
VIX has failed to rebound much, but it has held the TL support.
ZN has fallen a tad, but is still holding yesterday’s gains.
We see a large and growing divergence between TNX and ES.
The chart that really catches my attention is the Dow. Today, it topped its Sep 12 highs by all of 16 points — negligible, but a higher high and only 76 points from new all-time highs. If we are about to get a big plunge, it would be very much in character for the Dow to make new highs and for more bearishness to be wrung out of the market first by running some stops on a Friday afternoon.
It would be nice if the breakout above the red TL reversed by the close – with or without new highs. Otherwise, it would be hard for most traders to take the downside potential seriously.
Another potential upside attraction is ES’ 2.618 up at 3076.93 — 14 points (0.4%) above today’s highs. A pop up there on Sunday would be pretty nifty.
Bottom line, I’m discouraged re the downside but not quite ready to throw in the towel. If VIX closes below 12.19, I’ll be that much closer. But, one thing we’ve seen every single time stocks plunge by a lot — it always comes very late in the game and arrives with a ferocity that catches most by surprise.